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entries for 2001/9/05

business plan

Way back in the day, I wrote a business plan for manifestation.com. As you can see, it's not in business. I got sidetracked and wound up starting Zike. Looking back on it now, I realize that plan was kind of naive. The site I envisioned at the time was incredibly complex, combining neurotoys, message boards, goal tracking software, etc etc.. The revenue model was split between advertising, selling products, and selling a subscription service. The financial forecast looked great, and it probably would have worked out fine if I could afford the R&D time.
 
When Zike came along, it was an R&D company. That's all we did. Our time to market was through the roof. We had a great looking financial forecast for Zike, too... If Zach and his team ever finish ZikeShop, they'll have a cash cow on their hands. But there's still a long way to go, and it's going to cost money. We'd hoped all along to cover that cost by courting open source developers, but we just never made it happen.
 
In the end, we needed time and we needed money, and we ran out of both. Zach did the smart thing, and decided to take on custom work and use the money to bring in clients. I did the other smart thing, and decided to focus on the simplest form of a hosting business - one where I didn't have to build a product. Since our company just wasn't big enough for both philosophies, I figured it was time to split.
 
I bought the server on a whim a few months ago, just to finally get linkwatcher running on a single box. I only started hosting just to cover the costs. But over the past few months the idea grew, and I started getting serious about it.
 
So now, two years and two businesses since I decided to go my own way in life, I'm starting over.
 
This time around, I'm taking a new approach to my business plan. I'm starting with the model I found in Rich Dad's Guide to Investing.. He draws a business as triangle, which includes various parts: Product gets treated last because it's the least important part of the business.
 
I'll say that again, because it took me forever to understand it:
The product is the least important part of a business

 
That doesn't mean the product can be anything other than excellent. It just means that an excellent product isn't the same as an excellent business. (Robert Kiyosaki uses the hamburger analogy - anyone can make a better burger than McDonalds, but very few people can build a business as strong and profitable as McDonalds)
 
So, I'm starting with his model, and fitting in everything else I've learned. I'm selling pre-made products (apache, cvs, linux, etc) so I can focus 100% on the rest of the triangle.
 
I'm starting with systems. This weekend, while I was waiting for Sears to put new tires on my car, I picked up a copy of The E-Myth, which is basically about turning a small business into a system. I don't know how many times over the years I've picked up that book only to put it down again because it just didn't seem to have anything useful in it. Reading it this weekend turned my whole world around.
 
Alow me to digress a minute.
 
Once upon a time, a very twisted programmer created a language called Java2k. The tagline on the Java2k home page reads:
Java2k - unleashing the power of rand()
And the reason is that Java2k programs only probably do what they're told:
Java2K is not a deterministic programming language, but a probabilistic one. Even for built-in functions, there is only a certain probability the function will do whatever you intend it to do. All Functions have two different implementations. At runtime, based on a pseudo-RNG, the actual implementation is choosen. This is in line with common physicalist assumptions about the nature of the universe - there is never absolute security, there is always only probability.
Just about every company I've ever worked at behaved as if it were written in a language like Java2k. A few people give orders and everyone else just kind of does their own thing. Sometimes things get done right, sometimes everybody forgets about it. Somehow the roof stays up.
 
My first job was different. It sucked, but it more or less ran smoothly. My first job was at Arby's.
 
Franchises like Arby's and McDonalds specify the business down to the smallest detail. They have to. They're run by teenagers. And that's the secret to their success. Working there might not be all that wonderful, but the operations manual is the business equivalent of well-factored, well-tested, and fully specified code.
 
The E-Myth is about turning your business into something a teenager could run. It's about thinking things through from the top down. It even suggests drawing an org chart and defining the various roles to be filled long before you hire your first employee.
 
So that's my current project: figuring out how my company works. I think I even understand the references I've heard about simulating businesses in UML or object-oriented code. I may even try it that way.
 
I'm can't wait until everything's perfect to go live. I mean, I'm in business today. But if I had a useful model of the business system, I can focus on each part in turn, and optimize it just as if it were software.
 
For the next few months, I'll probably continue to focus on billing, signup, and an affiliate program... Once those are stable I'll give systems a rest for a bit, and start building a team. By team, I mean a lawyer and an accountant. I'd eventually like a part time employee or two, but not for a long time. Once all that is in place, I should have my cashflow, systems, legal, and product under control, and I'm ready to turn my attention to marketing. That's probably when I'll relaunch with the new name... Whatever that turns out to be.

cornerhost, part 2

Okay, cornerhost is kind of a crappy name for a hosting company.. Any better ideas?

resignation

Well, the big news was that I resigned from Zike Interactive to focus exclusively on my hosting business. It was a friendly breakup - basically, Zach wanted to start growing Zike, and I didn't want to go in that direction. Also, it was sounding more and more like ZikeShop was going to be switched over to Java, and my heart just isn't in it anymore. I want to stick with python and the (to me) simpler business of hosting. So, Zike is keeping zikeshop, and I'm retaining rights to the underlying libraries.
 
Basically, we figured we could work together better as two companies that helped each other out.. So, it's all good.